Ontario Teachers buying BCE --> what about the Leafs? For sale?

[william_adams]

IMHO this is a very good point made in another forum that deserves to be discussed:

Of more interest to anyone interested in intrigue should be what Ontario Teachers is going to do with their 57% of MLSE now that they are bidding 42 billion for BCE (which also owns a piece of MLSE). I say it is for sale. I do not Tanenbaum has enough money to take out Teachers, TD and Bell Globemedia but perhaps Tanenbaum and Ted Rogers can. And perhaps Mr. Balsillie enters the picture?
Who knows but Ontario Teachers will need lots of cash for the purchase of BCE and MLSE is not really a core holding for their portfolio. So I find any musings over hiring a hockey mentor rather amusing given some possible major ownership changes.

Hmmm... How much cash does Teachers need? How much could they raise with MLSE? Is a sale of the Leafs really possible??

It certainly has me interested... wait, I can't seem to find that spare half billion...

Just to throw some gasoline on the fire, here is a partial list of potential buyers all of which is pure speculation... Ted Rogers, Jim Balsillie, the Thompson family, Mike Myers, Northern Dancer, Eugene Levy, Eugene Melnyk (don't laugh, he is on record as saying the only reason he bot ottawa is 'cause toronto wasn't for sale...)....

Thots?

Click to read more...

 

[Danny__K]

selling the leafs would be the proverbial drop in the bucket in terms of the BCE acquisition. They're hoping to raise what? maybe 1% of the purchase price. Lets be honest owning a NHL team is more about bragging rights then vast sums of money. Leafs made what, 30 million last year??? BCE made almost 500 million last quarter, the only reason the teachers owns the leafs is for publicitiy.

 

[william_adams]

selling the leafs would be the proverbial drop in the bucket in terms of the BCE acquisition. They're hoping to raise what? maybe 1% of the purchase price. Lets be honest owning a NHL team is more about bragging rights then vast sums of money. Leafs made what, 30 million last year??? BCE made almost 500 million last quarter, the only reason the teachers owns the leafs is for publicitiy.

bidding 42 billion for BCE, but i think this is an LBO if i'm not mistaken so much of that will be new debt(?)

Teachers have internally valued (according to wiki) MLSE at over a billion -- this makes their share valued (as of 2003) in the neighbourhood of 600mm bucks... that's a lot of cash.

http://en.wikipedia.org/wiki/Maple_Leaf_Sports_&_Entertainment

also, bragging rights might be true for a corporation like a brewery or a newspaper, but a pension fund for teachers?? do you really think they own it for bragging rights?

 

[coolguy21415]

lol I don't think some people realises just how huge Teacher's is. They're like one of the 10 biggest pension funds in the world, IIRC. They just have massive, massive quantities of assets.

edit: http://biz.yahoo.com/ic/130/130523.html

There you go, net assets of $96 billion. Honestly, if anything I'd think that Teacher's would be interested in buying more of the Leafs, not selling it. Teachers is certainly leveraging a lot on BCE, though won't need to sell any part of MLSE to acquire BCE..

 

[TheLeastOfTheBunch]

lol I don't think anyone realises just how huge Teacher's is. They're like one of the 10 biggest pension funds in the world, If I recall correctly. They just have massive, massive quantities of assets.

edit: http://biz.yahoo.com/ic/130/130523.html

There you go, net assets of $96 billion. Honestly, if anything I'd think that Teacher's would be interested in buying more of the Leafs, not selling it.

HOLY SMOKIN' BEAVERS!

 

[Fugu]

How many teachers are there in Ontario..... and why aren't they all retiring?

 

[Sens Rule]

I hope the teacher's sell the Leafs to Balsille and he moves the team to Kitchener. That would be awesome.

 

[william_adams]

lol I don't think some people realises just how huge Teacher's is. They're like one of the 10 biggest pension funds in the world, If I recall correctly. They just have massive, massive quantities of assets.

edit: http://biz.yahoo.com/ic/130/130523.html

There you go, net assets of $96 billion. Honestly, if anything I'd think that Teacher's would be interested in buying more of the Leafs, not selling it. Teachers is certainly leveraging a lot on BCE, though won't need to sell any part of MLSE to acquire BCE..

96 billion is indeed a chunk of change, but i would think that only a relatively small portion of that would be allocated to private equity -- i have no idea if that means 2 billion or 20 billion, but certainly real estate, public equity, public debt, private debt etc take up a chunk of that 96 billion... especially when they're bidding 42 billion (financed by debt i would assume) for BCE...

 

[Northern Dancer]

bidding 42 billion for BCE, but i think this is an LBO if i'm not mistaken so much of that will be new debt(?)

Teachers have internally valued (according to wiki) MLSE at over a billion -- this makes their share valued (as of 2003) in the neighbourhood of 600mm bucks... that's a lot of cash.

http://en.wikipedia.org/wiki/Maple_Leaf_Sports_&_Entertainment

also, bragging rights might be true for a corporation like a brewery or a newspaper, but a pension fund for teachers?? do you really think they own it for bragging rights?

This indeed a leveraged buy-out which means Teachers will pay for BCE thru as much debt as humanely possible. It will be junk rated paper and will (in to-days terms) have a coupon of around 8.5/9.00 %

The less Teachers has to borrow to finance the purchase the better as a 9% coupon in a 3 % infaltion enviroment is a recipe for disaster. And Mr. Adams is correct, a 100 billion pension plan would be very foolish to have 40 or 50 % of its assets in private equity.

With NHL franchises trading at all-time highs, with Mr. Lamoureux, (Chairman of Teachers) retiring, with Teachers needing every spare penny for the BCE purchase I would think it is definately for sale. (keep in mind BCE also owns a piece of MLSE thru Bell Globemedia). If Teachers can gather 600 million for their 57% stake and Bell Globemedias share is worth 130 million then you have 730 million bucks which at 9% would save you almost 66 million dollars a year in interest expense.

With the Thompson family in the process of buying Reutors for a few billion I think they are out as a candidate. I think the most likely outcome is a Tanenbaum/Rogers deal that wud combine Leafs/Raptors/Blue Jays into one and then pursuing an NFL franchise for Toronto.

I would not also rule out that Balsillie's recent moves were nothing more than a head-fake to Teachers and his real target may be MLSE and not Nashville or any any other movable franchise.

And for some of the posters out there that think MLSE is chump change to Teachers and they would keep it for glory or whatever, keep in mind that despite being a 100 billion dollar pension plan it is UNDERFUNDED by a few BILLION last seen.

 

[Fourier]

This Union seems to be in a growth mode. They are actively trying to
sign up non-academic staff associations at some Ontario universities for example.

I do agree however that the Leafs do not seem to be part of the
BCE equation.

 

[Fourier]

How many teachers are there in Ontario..... and why aren't they all retiring?

The plan has done very well but it is a defined benefit plan.

 

[discostu]

I hope the teacher's sell the Leafs to Balsille and he moves the team to Kitchener. That would be awesome.

That would be quite the interesesting approach to get around terratorrial rights issues.

As for this comment:

Lets be honest owning a NHL team is more about bragging rights then vast sums of money.

I think it's fair to say that the Teacher's Pension fund is not invested in the NHL for bragging rights purposes. They hold it strictly as an asset. Any pension manager who's investing in teams without ROI as the driving concern would be fired immediately.

I think the idea of MLSE being sold isn't out of the question. If MLSE is extending themselves with the BCE bid, then, MLSE is a logical place to look. They probably wouldn't have trouble good value for the asset. The continued rise of the dollar, the limitation on payroll, that could bite into cash flows, and, the continued economic strength of Toronto, and, it becomes a high cash flow generating business.

 

[Fugu]

The plan has done very well but it is a defined benefit plan.

Thanks, Fourier, but my twisted sense of humor got the best of both of us. I was going to suggest that we all give up our current jobs and become teachers in Ontario.

 

[shakes]

I hope the teacher's sell the Leafs to Balsille and he moves the team to Kitchener. That would be awesome.

He didn't get to the position he's in by being stupid and that would be pretty stupid.

 

[Fourier]

Thanks, Fourier, but my twisted sense of humor got the best of both of us. I was going to suggest that we all give up our current jobs and become teachers in Ontario.

Sure.
I thought you were implying that they take the money and run! One of the universities in the province has a defined contribution plan that has been so
succesful that many emplyees retire with pensions in excess of their
salaries. On those cold days in January it would be tough not to
give serious thoughts to hangin' em up!!!

 

[Fourier]

This indeed a leveraged buy-out which means Teachers will pay for BCE thru as much debt as humanely possible. It will be junk rated paper and will (in to-days terms) have a coupon of around 8.5/9.00 %

The less Teachers has to borrow to finance the purchase the better as a 9% coupon in a 3 % infaltion enviroment is a recipe for disaster. And Mr. Adams is correct, a 100 billion pension plan would be very foolish to have 40 or 50 % of its assets in private equity.

With NHL franchises trading at all-time highs, with Mr. Lamoureux, (Chairman of Teachers) retiring, with Teachers needing every spare penny for the BCE purchase I would think it is definately for sale. (keep in mind BCE also owns a piece of MLSE thru Bell Globemedia). If Teachers can gather 600 million for their 57% stake and Bell Globemedias share is worth 130 million then you have 730 million bucks which at 9% would save you almost 66 million dollars a year in interest expense.

With the Thompson family in the process of buying Reutors for a few billion I think they are out as a candidate. I think the most likely outcome is a Tanenbaum/Rogers deal that wud combine Leafs/Raptors/Blue Jays into one and then pursuing an NFL franchise for Toronto.

I would not also rule out that Balsillie's recent moves were nothing more than a head-fake to Teachers and his real target may be MLSE and not Nashville or any any other movable franchise.

And for some of the posters out there that think MLSE is chump change to Teachers and they would keep it for glory or whatever, keep in mind that despite being a 100 billion dollar pension plan it is UNDERFUNDED by a few BILLION last seen.

Interesting post. This could be fun after all.

 

[GSC2k2*]

To all, don't forget that the Teachers only have a 52% interest in the company that is acquiring BCE.

Working from the pension fund website, they have $16 billion in private equity (that appears to be gross assets, which means $16 billion out of $140+).

Incidentally, in poking around their website, I saw this little tidbit:

The Teachers’ Pension Plan does not receive cash dividends from its investment – all money earned stays with the company.

Interesting, huh?

http://www.otpp.com/web/website.nsf/web/MLSE_FactSheet

 

[Free Edler]

To all, don't forget that the Teachers only have a 52% interest in the company that is acquiring BCE.

Working from the pension fund website, they have $16 billion in private equity (that appears to be gross assets, which means $16 billion out of $140+).

Incidentally, in poking around their website, I saw this little tidbit:



Interesting, huh?

http://www.otpp.com/web/website.nsf/web/MLSE_FactSheet

I don't understand the law or finance applications about such a complex deal, but isn't it kind of silly for the teachers not to get a dividend cheque out of their holdings?

 

[GSC2k2*]

I don't understand the law or finance applications about such a complex deal, but isn't it kind of silly for the teachers not to get a dividend cheque out of their holdings?

Not if they are using it for further investments (such as condos or developments) or repaying the substantial debt incurred to build the ACC.

 

[Free Edler]

Not if they are using it for further investments (such as condos or developments) or repaying the substantial debt incurred to build the ACC.

OK, that makes a little more sense, I had no idea what sort of holdings the pension fund had aside from the Leafs and ACC.

 

[Metallian*]

Leafs made what, 30 million last year??? .

nonononono

okay, so they are spending roughly 25-30m less now than what they were pre-cap

so you are saying the Leafs were breaking even pre lockout?

i don't think so buddy!

 

[Garbs]

You wouldn't be buying the Leafs, you'd be buying an umbrella group. You'd own the Leafs, the Raptors, Toronto FC, Toronto Marlies, the Air Canada Centre, Leafs TV, Raptors TV, and Maple Leaf Square, as well as other lucrative real estate.

This isn't the Pittsburgh Penguins, it would cost somewhere in the billions to buy the Leafs outright. I don't envision it ever happening.

Leafs made what, 30 million last year???

*blink*

 

[Northern Dancer]

nonononono

okay, so they are spending roughly 25-30m less now than what they were pre-cap

so you are saying the Leafs were breaking even pre lockout?

i don't think so buddy!

I doubt very much the Leafs made 30 million either of the last two years. Of course their payroll is down substantially but there also was NO play-off revenue either year (which is huge) and the Leafs now pay into revenue sharing.

 

[Garbs]

I doubt very much the Leafs made 30 million either of the last two years. Of course their payroll is down substantially but there also was NO play-off revenue either year (which is huge) and the Leafs now pay into revenue sharing.

They missed the playoffs in 2006 and were still the most profitable team in hockey. Sponsorship, advertising, gate receipts, television deals...

The Leafs, specifically, were said to have made 40 million, but MLSE is notorious for concealing other revenues of cash and publicly undervaluing themselves.

I remember a report saying the Leafs 'donate' 10-12 million to revenue sharing; Ferguson was complaining that it was too much, and the league was overstating how much they make. I remember Toronto pundits having a good laugh at that one, and the feeling being the league could justify taking much more.

 

[Fugu]

You wouldn't be buying the Leafs, you'd be buying an umbrella group. You'd own the Leafs, the Raptors, Toronto FC, Toronto Marlies, the Air Canada Centre, Leafs TV, Raptors TV, and Maple Leaf Square, as well as other lucrative real estate.

This isn't the Pittsburgh Penguins, it would cost somewhere in the billions to buy the Leafs outright. I don't envision it ever happening.


*blink*

Only if the owners insisted on selling it that way. What's that line about the sum of the parts being greater than the whole? Unless of course, one of the parts is propping up the rest, which should mean the new owner might want to divest himself of those concerns as well, if indeed the only option was the package deal.

And let's keep this in perspective. Is there anything other than the hypothesizing about an alleged shortfall in making an acquisition that's fueling the conjecture that MLSE may be on the block?